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For all the discourse about an AI hype bubble, many insurers are already seeing big returns from their investments. But to realise those gains, insurance companies have to trust their AI to provide the right answers – and the AI must show that it warrants that trust.
Those are some of the themes in the second annual Data and AI Impact Report: The New Economics of Trust, a new report from data and AI leader SAS with research insights from IDC, based on a survey conducted of 2,699 decision-makers across 28 countries.
Dr. Chris Marshall, VP for Enterprise AI Strategy at IDC, said:
“The insurance industry demonstrates that, with AI, ROI follows trust. The insurers who are governing AI well are the ones seeing strong returns.”
Insurance is the industry most strategically committed to AI – and has the clearest divide between trustworthy AI leaders and laggards. Over half of insurers (54%) have AI operational across several functions or scaled companywide. And insurers that pair AI deployment with trustworthy governance are the ones realising business value.
AI governance separates leaders from laggards
The report separated organisations into trustworthy AI “leaders” (those with the strongest governance, data quality and auditability practices) and “laggards”.
Among insurance AI leaders, 59% expect strong or high AI ROI, compared with 0% of laggards – the only industry in which laggards produced no strong ROI signal at all.
The contrast is also stark in terms of transparency throughout the organisation: 78% of leaders have communicated a responsible AI policy to every employee – versus just 3% of laggards.
The report revealed that AI creates more value when companies use it for more ambitious goals. It also found that the most common goal named by laggards for their AI use is cost savings. Leaders, on the other hand, prioritise operational efficiency, increasing profits and revenue growth. Deploying AI primarily to cut costs is among its least effective uses.
Franklin Manchester, Global Strategic Insurance Advisor at SAS, said:
“Whenever I hear executives say they’re investing in AI in order to reduce staff, it tells me that the organisation has no strategy. Because cutting costs is the least imaginative use for AI. Keep your people, teach them how to use the tools safely, and pursue goals like improved customer experience, expanded market share and stronger resiliency.”
Investment in AI is rising – and so are expectations. Over 3 in 4 insurers (76%) expect to increase their AI investment in the next year. A large majority (84%) expect a positive return, while over 6 in 10 anticipate that ROI to be 50% or more. And once again, those gains are expected from customer-facing outcomes rather than cost reduction.
Insurance is the first industry to close the gap between trust and capability: perceived trust in AI now exceeds measured capability, by less than 1%.
Trust doesn’t always mean following AI’s advice
Users still have significant concerns about AI being inaccurate, biased or unsafe. Across industries, nearly 80% of respondents say their organisations override more than 10% of decisions by AI agents; nearly a third do so more than 30% of the time.
The most frequent reason cited for overriding AI was lack of explanation for its decision (34.5%). But a combined 40% cited either bias/unfairness, factual incorrectness or decisions they felt were unsafe (8%).
“The concerns over safety are a red flag,” said Franklin. “Eight per cent may sound like a small number. But when you consider the speed at which AI generates output, and the thousands of decisions made by insurers every day – never mind bankers, healthcare providers and other industries – that small percentage translates to a very large number of actions to be potentially unsafe.”
Europe: trust is growing, impact still catching up
In Europe, insurers are strengthening AI trust – but business impact has further to go. Here, insurers have made significant progress in AI trustworthiness, with their Trustworthiness Index rising from 41.9 to 60.6 year on year. The index measures the governance, data and oversight practices that make AI reliable. However, they still remain behind the global insurance benchmark of 63.2.
Perceived trust in Europe also fell slightly, from 70.2 to 69.1, while the AI Impact Index, a measure of realised business value, stands at 53.0, compared with 55.9 for insurance globally.
The findings reveal an opportunity for European insurers to translate improvements in AI governance and trustworthiness into greater confidence and stronger business outcomes.
Dr. Chris Marshall added:
“The path forward is to scale AI deployment and user trust in tandem so that reliability and confidence can grow together.”
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